Like people worldwide, many Hong Kong’s citizens changed how they work, study, shop, and entertain themselves over the last two years. That has led to a substantial increase in their money on subscription video on demand (SVOD) services. The average revenue per user (ARPU) for the SVOD market in Hong Kong reached US$103.69 in 2021, having grown 9% year on year from US$94.91 in 2020 and 23% from US$84.08 in 2019.
A clamor fuelled that expansion for multiple forms of fresh and engaging entertainment content during long periods of social restrictions and economic lockdowns during the coronavirus crisis. But continuing post-pandemic demand, combined with the large pool of potential new customers, is expected to push SVOD ARPU in Hong Kong further over the next five years – ARPU will grow at a CAGR of 2.4%, which will make it up to US$124.29 by 2026.
Subsequent forecasts suggest that Hong Kongers will collectively spend US$174m on SVOD subscriptions in 2022, rising to US$188m in 2023 and US$213m in 2026. By that point, SVoD services are expected to have penetrated 22% of Hong Kong households, up from 19.8% in 2021, with user numbers expanding from 1.5m to 1.7m over the same period.
TVOD lower penetration, ARPU, and market value
By contrast, penetration rates for pay-per-view TV in Hong Kong (or TVOD) are much lower. Services were purchased by just 9.3% of the country’s households in 2021 and are set to reach just 10.3% by 2026. TVOD ARPU is also expected to expand slightly in parallel over the same period, albeit from a much lower base – from US$7.41 in 2021 to US$8.12 by 2026. Similarly, the size of the overall TVoD market in Hong Kong is significantly smaller than that for SVOD – worth around US$5.5m in 2021 and forecast to expand to around US$6.5m over the next five years.
Like SVOD, TVOD growth rates also appear to have peaked during the pandemic in 2020, when the total spent rose just over 16% YoY to US$5m. But they have since fallen to 6% in 2021 and will decelerate further to deliver a compound annual growth rate (CAGR) of around 2.7% between 2022 and 2026.
Chinese SVOD platforms dominate
Hong Kong is served by a mix of global and local SVOD and VOD platforms offering films, TV shows, and other content in both English and Chinese. Leading Chinese VoD services in Hong Kong include Mango TV, Youku Tudou, and Baidu-owned IQiyi, for example, with the latter set to launch a secondary listing on the Hong Kong stock exchange this month [March 2022][i]. WeTV, a version of Tencent Video available to countries outside of its native China, is also accessible by subscribers in Hong Kong. The service was the joint-most used SVOD platform in China in 2021 alongside IQiyi, according to statistics compiled by Rakuten Insight.
Statista provides a different perspective, with a survey of over 1,700 Hong Kongers aged sixteen and above conducted in May 2021 indicating that 82% used Netflix, compared to 38% that used Viu, 29% myTV Super and 16% AppleTV+. Other US platforms, including HBO Go and Amazon Prime Video accounted for just 7% and 6% respectively. Elsewhere statistics collected by Similarweb between January and December 2021 suggest Netflix.com was the 20th most visited website in Hong Kong. Yet another Chinese language service – Bilibili – proved more popular with Hong Kongers, ranking 14th on the same list. Shanghai-based Bilibili has evolved from a video sharing website themed around animation, comics and games into a fully fledged VoD platform offering documentaries, variety shows and other original content.
Yet another Chinese language service – Bilibili – proved more popular with Hong Kongers, ranking 14th on the same list. Shanghai-based Bilibili has evolved from a video-sharing website around animation, comics, and games into a fully-fledged VoD platform offering documentaries, variety shows, and other original content.
Demand for many forms of video content in Hong Kong is consistent – adults spend an average of two hours and 44 minutes a day watching TV, which is either broadcast or streamed to their viewing devices. Almost 94% of Internet users aged between 16 and 64 watch some video content every week, according to GWI, with 30% explicitly accessing live video streams and 24% gaming videos. Livestreaming platform Bigo Live was ranked 9th by consumer spend in App Annie’s mobile app rankings during 2021.
GWI also estimates that 97% of Internet users aged between 16 and 64 stream TV content over the Internet and spend an average of one hour and five minutes a day doing so, accounting for 40% of all the TV they watch. While just 52% of Internet users in the country use SVOD services – the fourth-lowest proportion in the Asia Pacific region according to GWI – that leaves ample headroom for providers to attract and retain new subscribers. Providing new and exclusive content may prove to be a key strategy in helping them do that – just under 12% of Hong Kongese Internet users aged between 16 and 64 Kong cited exclusive content as an essential factor in encouraging them to complete an online purchase in Q321.
Mobile first in Hong Kong
Evidence suggests that the smartphone is the Internet device of choice in Hong Kong, indicating that people use their mobile devices to access SVOD services. Over 7m people in the country (93% of the population) are Internet users and 92% access the Internet specifically via their smartphones. Statistics compiled by GWI in the third quarter of 2021 suggest that almost 97% of Internet users aged between 16 and 64 own a smartphone, significantly more than those with a laptop or desktop computer (70%), tablet, or games console (29%).
The country also has one of the highest proportions of mobile phone subscribers on post-paid contracts in the APAC region at just under 60%, suggesting that mobile Internet is considered a necessity rather than a luxury by most of the population, which also has sufficiently stable income to fund long contracts. Average mobile Internet speeds are also high (43Mbit/s) compared to many other APAC countries, having increased 18% year on year in 2021, according to Ookla speed tests conducted in November 2021.
Of the 7.6m citizens crammed into just 426 square miles, half are under the age of 45 and are likely to see the smartphone as the default screen for SVOD viewing for some time to come.
[i] Baidu’s iQiyi Picks Banks for Hong Kong Second Listing, Bloomberg, 6th October 2021